12
Summary of Recommendations of the Panel

RESHAPE U.S. NATIONAL SECURITY POLICY IN RESPONSE TO THE CHANGING CALCULUS OF U.S. NATIONAL SECURITY INTERESTS

Changed Traditional Threat

In response to the changed nature of the traditional threat to U.S. national security, U.S. export control policy toward the Soviet Union and Eastern Europe should reflect a mixed strategy of encouraging political and economic reform and making further relaxation of controls contingent on evidence of additional change. To this end, U.S. national security policy should keep in mind the following elements:

  • Continue to constrain access by the Soviet military to technology and end products that contribute significantly and directly to the improvement of weapons capabilities.

  • Ensure that export controls do not impede the permanent conversion (or closure) of Soviet military industrial facilities to the manufacture of products for civilian consumption.

  • Encourage further positive changes in the security policy of the Soviet Union, including additional force demobilizations and redeployments.

  • Encourage stable political and economic transition in the Soviet Union through a broadened process of democratization and economic reform.



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Finding Common Ground: U.S. Export Controls in a Changed Global Environment 12 Summary of Recommendations of the Panel RESHAPE U.S. NATIONAL SECURITY POLICY IN RESPONSE TO THE CHANGING CALCULUS OF U.S. NATIONAL SECURITY INTERESTS Changed Traditional Threat In response to the changed nature of the traditional threat to U.S. national security, U.S. export control policy toward the Soviet Union and Eastern Europe should reflect a mixed strategy of encouraging political and economic reform and making further relaxation of controls contingent on evidence of additional change. To this end, U.S. national security policy should keep in mind the following elements: Continue to constrain access by the Soviet military to technology and end products that contribute significantly and directly to the improvement of weapons capabilities. Ensure that export controls do not impede the permanent conversion (or closure) of Soviet military industrial facilities to the manufacture of products for civilian consumption. Encourage further positive changes in the security policy of the Soviet Union, including additional force demobilizations and redeployments. Encourage stable political and economic transition in the Soviet Union through a broadened process of democratization and economic reform.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Maintain consensus with U.S. allies on the coordination of further liberalization of export controls on trade with the Soviet Union. Move progressively toward the removal of export controls on dual use items to the Soviet Union and the East European countries for commercial end uses that can be verified. Increased Proliferation Threat The growing capacity of many nations to develop and employ weapons of mass destruction poses new threats to U.S. and international security and requires new and innovative policy responses. Those policy responses should be predicated on the following considerations: Proliferation of weapons of mass destruction, their delivery systems, and advanced conventional weapons is a U.S. national security concern, and it should be treated as such in U.S. law and policy. The principal focus should be on those proliferation problems—nuclear weapons, chemical and biological weapons, and missile delivery systems—that, in combination, have the potential to create expanded negative impacts. Control regimes must be tailored to the particular circumstances of specific proliferation threats and, to be effective, must be as fully multilateral (i.e., involve the maximum number of suppliers) as possible. Some of these regimes are likely to rely, at least in part, on properly fashioned export controls. Such controls should be targeted only on those technologies or products directly essential to the development and/or manufacture of weapons of mass destruction. Role of the Intelligence Community in the Export Control Process In this period of rapid change and uncertainty within the Soviet Union and Eastern Europe, and new threats from countries of proliferation concern, the quality, accuracy, and timeliness of intelligence information are ever more critical. For this reason, the panel recommends the following: The intelligence community should expand its efforts to develop reliable assessments of changes in the nature and pattern of current Soviet technology acquisition efforts—and current patterns of Soviet utilization of the technology it acquires—and should make this information available to the relevant agencies of the U.S. government and to the countries participating in the Coordinating Committee for Multilateral Export Controls (CoCom). The intelligence community should continue and expand its recent efforts to develop an analytic capability to examine Soviet technology acquisition and utilization from the standpoint of the actual state of

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Soviet technological progress, both civilian and military, and the internal dynamics of technology diffusion within the Soviet Union and East European countries. The executive branch should give serious consideration to reallocating resources—and/or identifying additional resources—to develop better information about the acquisition and utilization of sensitive Western technology by countries of proliferation concern. DEVELOP NEW U.S. AND MULTILATERAL EXPORT CONTROL REGIMES U.S. Policy Circumstances in the Soviet Union and/or other currently proscribed countries may evolve to the point that export controls on dual use technology to those destinations can be completely eliminated. To encourage this evolution and to ensure that institutional momentum does not maintain the use of export controls longer than prudence requires, the United States should work with the other CoCom countries to develop an explicit multilateral policy statement that outlines the circumstances under which dual use export controls can and should be terminated. Multilateral consensus on the goals, targets, and mechanisms of export controls is essential and should be a critical foreign policy priority for the United States. This includes reviewing the organization and operation of control regimes aimed at East-West trade, as well as seeking the cooperation of the Soviet Union, China, and other countries in controlling the global proliferation of arms. Foreign Policy Controls Given the close relationship between national security controls and controls based on foreign policy considerations, the panel makes the following recommendations: Foreign policy controls maintained to prevent the proliferation of missile delivery systems or nuclear, chemical, or biological weapons should be reclassified under the rubric of ''proliferation controls" to differentiate them appropriately as an element of U.S. national security policy. The United States should not impose foreign policy controls on a continuing basis, except in those circumstances in which sufficient multilateral agreement and cooperation exist to make them efficacious and

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment to prevent discrimination against U.S. product and technology suppliers. If unilateral foreign policy controls are used, then the setting and enforcement of time limitations become imperative. The United States should, in all cases, seek to negotiate multilateral implementation and enforcement, or informal cooperation (whenever possible) from other countries in similarly restricting trade. However, the United States will find it difficult to lead if few other countries can be convinced to follow. Under these circumstances, the imposition of unilateral foreign policy controls may become counterproductive and damaging to U.S. economic interests, and every effort should be made to remove them at an early time. The criteria for the imposition and retention of national security and foreign policy controls set forth in Sections 5 and 6 of the Export Administration Act (EAA) of 1979, as amended, should be reviewed and made more explicit. To the extent that the President chooses to invoke export control measures through the use of the International Emergency Economic Powers Act (IEEPA), the criteria for its application should be reviewed and modified so that they are similar to the conditions that Congress has specified in Sections 5 and 6 of the EAA with respect to controls imposed for national security or foreign policy reasons. "Emergency powers" granted to the President under the IEEPA generally should not be imposed for more than six months before Section 6 of the EAA must be invoked. The "sunset" provision for foreign policy controls should be enforced in order to ensure that, as in the case of more traditional national security controls, restrictions do not remain in force long after the political, military, or technological rationale for their enactment has ceased to exist. Proliferation Controls: The Need for Collective Security Export controls are not universally effective in slowing proliferation, but if multilaterally applied and enforced, they can help to constrain the proliferation of weapons and the technical capability to produce them. To employ export controls effectively in managing proliferation risks, the United States should take the following steps: Analyze the relative usefulness and advantages or disadvantages of alternative types of export controls for different proliferation or security concerns.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Focus proliferation controls narrowly on the proliferation risks and activities of greatest concern. Develop a new regime, or expand an existing regime, to cover proliferation of advanced conventional weapons and related systems. Seek active, specific, and operational coordination on proliferation controls among the major players, including at least the United States, the United Kingdom, the Soviet Union, France, Germany, Japan, and China. As part of a broader strategy of managing proliferation risks, seek to strengthen and coordinate existing proliferation control regimes with the long-term goal of eventual consolidation. Prepare both a U.S. and multilateral approach to the problem of states that have become nuclear but that are currently treated as nonnuclear under the Nuclear Non-Proliferation Treaty. Encourage other participants in the Zangger Committee to control the export of critical, dual use items. Work to resolve the internal problems in the Missile Technology Control Regime and to expand membership to include other important supplier states, including the Soviet Union, India, and China. Construct a positive list of civilian space launch or satellite projects that have committed to peaceful end use and are certified as acceptable recipients of missile-related goods and technology. To the extent feasible, state the retransfer restrictions and end-use conditions necessary for acceptable sales of dual use items subject to missile technology controls. In negotiating the Chemical Weapons Convention, explicitly consider collective export control responses to nonsignatories that develop or possess chemical weapons. Seek enforcement and inspection procedures that successfully focus on those few destinations that pose the greatest proliferation risks. Multilateral Control Regimes COCOM: A NEW DIRECTION In response to new political, economic, and military realities, CoCom should develop a flexible control strategy. To this end, CoCom should take the following steps: Approve the sale of Industrial List items to the Soviet Union and Eastern Europe for civilian end uses when acceptable safeguards can be demonstrated to CoCom.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment To the extent feasible, publish standard end-use conditions necessary for favorable consideration of exports of controlled items. Provide for periodic, and in some cases unannounced, visits to the end-use site to verify the end use of limited, selected items. The possibility of visitation would be a stated condition of sale. The visits might be performed by (1) members' individual enforcement agencies, (2) collective or joint member enforcement, (3) the exporter, or (4) by private inspection companies certified by CoCom. BORDERLESS TRADE WITHIN THE EUROPEAN COMMUNITY In light of the changing operational environment for export controls within the European Community, the United States should press CoCom to take the following steps: Adopt a license-free system of trade in CoCom, to be implemented consistently and in accord with "common standard" compliance in order to ensure effective controls and to avoid disadvantaging those countries that make the effort to comply. Promote the use of a generic control indicator in conjunction with internationally recognized import/export documents. The control indicator, or marker, could be used by all countries that maintain restrictions on the export of certain items. THIRD COUNTRY COOPERATION To encourage expanded third country cooperation, CoCom should take the following actions: Include on the CoCom core list of controlled items only those items that are physically produced or sourced only in CoCom member nations or fully cooperating third countries. Initiate a plan whereby fully cooperating third countries can observe and contribute to CoCom list construction and case review. This may involve expanding the membership of CoCom or creating an "observer status." Eliminate reexport authorization requirements for goods being reexported out of fully cooperating third countries. Seek multilateral agreement to control the reexport of controlled goods out of noncooperating third countries. Offer extension of the license-free system of trade as a CoCom-wide benefit to cooperating countries that have operational export control systems. The Third Country Cooperation Working Group in CoCom should certify the cooperating countries that have adequate systems.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment COCOM ADMINISTRATION AND MANAGEMENT Increased cooperation is necessary during this time of transition in Europe to ensure "equal footing" among all members while managing the redefinition of trade goals as they relate to mutual security. To this end, the United States should also press CoCom to undertake the following: Seek a common standard of licensing and enforcement practices for trade with nonproscribed countries. This should include controls on the reexport of controlled items (including those items eligible for approval with conditions) out of noncooperating countries. Eliminate the use of national discretion (administrative exception controls). The revised Industrial List ("core list") should be brief enough that all cases can be reviewed by CoCom. Improve the transparency of CoCom operations. This includes making the conditions necessary for favorable consideration of controlled exports standard and public, to the extent feasible. "Internationalize" the image of CoCom. For example, (1) move CoCom headquarters out of the U.S. embassy annex in Paris, (2) upgrade the involvement of the other members in the administration of CoCom, and (3) share the costs of operation more evenly. Encourage increased input from members' national defense and intelligence agencies by upgrading and more fully integrating with CoCom the existing Strategic Technology Experts Meeting. The U.S. Control Regime POLICY FORMULATION A workable regulatory scheme and efficient administrative structure require strong policy direction. The executive branch must formulate an efficient and coherent policy development framework and provide an appropriate administrative structure to ensure that policy is properly executed, particularly because the absence of such guidance in the past has led to deficiencies in the policy process. To accomplish this, the executive branch should undertake the following: Provide Explicit Presidential Leadership Since the National Security Act of 1947 and subsequent legislation give the President authority to provide detailed instructions on key components of export control policy, a national security directive (NSD) should be the President's vehicle for the formulation and implemen-

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment tation of export control policy. Such a directive would specify the interagency mechanisms for implementing the President's policy, particularly with regard to a streamlined licensing system and a fast, effective dispute resolution process. Through the vehicle of an NSD, the President should provide guidance on the fundamental objectives for all national security export controls (including munitions, dual use, nuclear, missile, and chemical/biological controls) and direction for achieving those aims. The directive should include, in particular, guidance on the following critical aspects of export control: List construction The NSD should establish the general policy and specific procedures for constructing and reviewing the control lists. The guidance regarding process methodology should cover at least the following areas: Establish interagency methodology for list construction, including criteria or standards for determining military criticality, economic costs, and other factors. Specify agencies responsible for assessing the national security importance of controlled items and clarify priorities (or burden of proof) for balancing diverse interests. Specify the process for resolving disputes over list construction. Regulatory procedures, licensing, and dispute resolution The NSD should establish guidance for the development of regulatory control regimes, including establishing the targets of controls, such as destinations and end uses. The NSD should also prescribe parameters for distinguishing between routine and exceptional licensing cases and detail the decision-making process for each. The directive also should identify responsibilities for review and resolution of exceptional cases. Time limits should be included to ensure expeditious decision making. To eliminate the existing public confusion over the specific terms of U.S. export control policy, which is a major defect of the current system, presidential guidance should be made public to the extent possible. Although elements of the NSD might require classification, broad policy concepts and the details of policy execution should be stated publicly. Develop Formal Policy Mechanisms The NSD should lay out formally the details of this executive structure, which would correspond roughly to the current administrative structure.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Lines of responsibility and accountability should be clearly established among all the participating groups. These groups are briefly discussed below. Export Control Policy Coordinating Committee An Export Control Policy Coordinating Committee (EC/PCC) should be established to formulate and review policy recommendations, resolve exceptional disputes among agencies, and monitor the work of the interagency groups. The EC/PCC would be the locus for export control policy decision making within the framework of the NSD. It should comprise senior representatives of involved departments and agencies. To ensure objective evaluation of disputes reaching this level and the immediate attention of the National Security Council as necessary, the EC/PCC should be chaired by the national security advisor or the deputy advisor. National security export control interagency groups Interagency working groups should be established as necessary to consider the appropriateness of export controls as a means of addressing overall U.S. national security and foreign policy objectives. Serving as the principal operating policy groups, they should advise the President on the advantages and disadvantages of the various U.S. export control programs and on the need for modification of current programs or for new programs. Because export control policymaking is an extremely complex field that demands a high degree of technical sophistication and in-depth command of the interagency apparatus, the interagency groups should be given adequate staff support. Working groups and technical groups Necessary working groups of the interagency groups, including technical groups, should be established. These groups should be charged with responsibility for all areas relating to export controls. Institutionalize Economic Security in a National Security Framework Because many important national security issues will involve serious economic concerns, those federal agencies responsible for economic matters should be formally brought into the policy process for meetings in which their expertise could serve the national interest. Specifically, the secretary of commerce should be included routinely as an advisor/participant in National Security Council discussions.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Develop Standards for Munitions and Dual Use Items If the control scheme is to involve separate lists for munitions and dual use items, the delineation between the two lists should be clear, especially if each list is separately administered, as at present. The terms defense articles and dual use goods and technologies should be clearly differentiated if the Munitions List is to remain distinct from the Commodity Control List. If a separate Munitions List is maintained, it should only contain (1) items specially designed for a significant and uniquely military application and (2) items that do not have essentially the same performance, capacity, or function as items used for commercial purposes. Set Time Limits and Dispute Resolution Procedures Clear policy guidance, including guidance on timely procedures for resolving interagency disputes, should be provided to obviate most of the need for legislated deadlines. POLICY EXECUTION More efficient case processing, better procedures for dispute resolution, and greater system transparency are among the potential gains from a revised administrative process. To this end, the U.S. government should take the following steps: Consolidate Administration in a Single Agency In order to achieve a more rational and effective export control process, the U.S. domestic process should be reconfigured through consolidation of all day-to-day administrative functions in a single agency. Single agency authority for day-to-day functions will have the following advantages: Establish a more rational and consistent regulatory structure. Achieve efficiency in list administration and implementation of regulatory changes. Attain further improvement in license processing. Avoid jurisdictional disputes at the administrative level. Facilitate industry's access to information on export control requirements. Increase efficiency by consolidating the electronic data processing functions of various administrative agencies.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment The reorganization and accompanying policy directives will give the single agency final authority to make decisions on routine licenses, to promulgate regulations, and to resolve interpretive disputes within the specific policy guidelines of the NSD. Many routine licensing decisions, for example, are of a level that can best be handled within the independent authority of a single administrative agency. Authority also should extend to administrative aspects of list management. The consolidation will entail combining regulatory regimes to achieve uniform administrative requirements with levels of control appropriate for attainment of policy objectives. At the same time, the agency's decision making should be guided by the broad policy framework developed in the traditional interagency process. The goal of the reorganization is to consolidate administration of controls based on an internally consistent set of regulations while keeping broad policymaking and final dispute resolution in the hands of the President and the responsible cabinet secretaries in the National Security Council and the Export Control Policy Coordinating Committee. Responsibility for the administration of restrictions on dual use items, munitions, items controlled for nonproliferation purposes, and trade-related items under "emergency" powers should be transferred to the single agency. The goal of a more transparent licensing process should be achieved through a "one-stop shopping" mechanism, that is, a single administrative window for exporters seeking to obtain licenses. "One-stop shopping" should be established in harmony with other restructuring of the control apparatus lest it devolve into a well-intentioned but ineffective initiative. Designate the Commerce Department's Bureau of Export Administration as the Single Administrative Agency for Export Controls Careful consideration of the alternatives for consolidating agency functions led the panel to make the following recommendations: The Commerce Department's Bureau of Export Administration (BXA) should be selected as the single administrative agency for export controls. As part of the consolidation of functions, measures should be taken to lessen any remaining deficiencies at BXA, such as strengthening the technical center staff at the Office of Technology and Policy Analysis and upgrading its professional grade levels.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment OTHER CHANGES RELATED TO PROPOSED REFORMS The reforms proposed above will have to be accompanied by certain legislative and other administrative changes to become operative. Although the proposed changes would require some statutory revision and some transfer of functions among executive agencies, responsibilities for policy formulation would remain with the appropriate departments, subject to coordination with congressional bodies and the mechanism for interagency policy formulation. In addition, agencies with special expertise will be involved in the interagency and working groups and in license reviews. Harmonize the Structure of Control Lists A set of integrated U.S. control lists should be fashioned so that the different lists are similarly structured and formatted. Integrating the lists will lessen overlap and discrepancies among the control lists and conflicts among associated regulations. By keeping the system as simple as possible, the goal of greater transparency of the control system will also be furthered. The respective structures of the U.S. and international control lists should also be harmonized. The process for choosing items for control within any particular control regime should involve the following: Identification of items of potential concern. A rank ordering and weighting of items in terms of the national security risks posed by an adversary's acquisition and use of each item, with careful consideration given to the controllability of items. An approximate rank ordering and weighting of items in terms of the economic and foreign policy costs of restricting trade in each item of concern. A policy judgment as to how the risks and benefits of control should be balanced. A comparison of benefits and costs that allows a sorting into controlled and uncontrolled items. Building on progress made so far in the policy process, the United States should continue to make the appropriate shift of administrative resources from traditional East-West export controls to controls directed at proliferation concerns and the end-use verification of more narrowly targeted East-West controls, as suggested by the panel. An interagency task group should regularly review the Munitions and Commodity Control Lists to eliminate duplication and ensure coordination with the CoCom Industrial List. The U.S. dual use list should be compatible with other multilateral control arrangements.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Provide for Administrative Due Process and Appropriate Judicial Review The statutory exemption in Section 13(a) of the EAA from the application of certain provisions of the Administrative Procedure Act (APA), including the appropriate level of administrative due process and judicial review of Commerce Department actions, should be removed. The provision in Section 13(b) of the EAA for ''meaningful opportunity for public comment" should be retained even if Section 13(a) is repealed, since under the APA any agency may exempt regulations from pre-issuance for public comment if security or foreign policy so require. Resolve Enforcement Issues The General Accounting Office (GAO) should be requested to undertake a study of the appropriate mechanism(s) for enforcement of export controls. Questions the GAO study should address include the following: What are the requirements for enforcement in the various export control laws and how do they differ for the Export Administration Act, Arms Export Control Act, Atomic Energy Act, Nuclear Non-Proliferation Act, International Emergency Economic Powers Act, and the Trading with the Enemy Act? To what extent are there problems with enforcement of the Export Administration Act? Specifically, Are organizations effectively accomplishing their assigned enforcement missions? Are enforcement resources allocated rationally? Are there mechanisms to promote coordination and cooperation in enforcement efforts? Do efficiencies result from linking administration to enforcement? What is the degree of exporter cooperation with the Commerce Department and the Customs Service? What enforcement improvements are required? Is there a more effective basis for organizing enforcement responsibilities? More specifically, an effort should be made to analyze and systemize the various criminal and civil sanctions in the U.S. export control statutes. In addition, given that a number of export control statutes lack civil enforcement provisions, consideration should be given to enactment of appropriate civil sanctions for export control violations, to-

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment gether with adoption of appropriate procedures for implementation of those sanctions. With regard to administration of enforcement, uniformity of administrative procedures should be part of the single administrative agency recommended by the panel. The existing Commerce Department enforcement procedures appear to be appropriate. In the absence of single agency administration, therefore, enforcement procedures similar to those of the Commerce Department should be instituted in the other affected agencies. Enhance U.S. Representation at CoCom Given the increasing relative importance of international economic concerns and the greater weight U.S. partners in CoCom attach to trade considerations, industry concerns should be more fully represented at CoCom discussions. As with the U.S. government domestic process, the CoCom process should be made more transparent. There is ample justification for publishing material such as the Industrial List, the CoCom schedule of list review, and, to the extent security considerations permit, commonly agreed criteria for CoCom decision making. The level of technical knowledge of the permanent U.S. mission to CoCom should be upgraded to the extent necessary. Increase Industry Participation Greater balance and effectiveness in the export control system require increased industry participation in the system. A process in which defense, foreign policy, and economic concerns are all coordinated into a cohesive U.S. policy would be further encouraged by the following steps: To improve the current level of industry input, the President should establish a permanent industry advisory committee on export administration. To ensure continuity from administration to administration, the committee should be required by law. The committee should have the following features: Charter—Advise the government on all forms of export controls that may be authorized by law or executive order. Membership—Industry members (representing firms affected by export controls) would be appointed by the President from nominations made by the key agencies: Commerce, Defense, State, and Energy. Terms—Industry members would be appointed for staggered, six-year terms to ensure continuity across changes in administration.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment Chairperson—The chairperson would be appointed by the President from industry members. Secretariat—The Commerce Department would provide the necessary staff and resources to support the committee's work. In addition, the following changes should be made to the technical advisory committees to enhance the breadth of their charge, level of interagency participation, and amount of technical expertise: The scope of the charge of the technical advisory committees should be broadened to include nonproliferation controls and munitions controls. The State and Defense Departments should appoint a portion of the industry members to ensure their confidence in committee expertise in defense products and technologies. The Defense Department should appoint at least one representative to each technical committee to serve as a regular participant. Other agencies should appoint participants to a committee when that committee's scope is relevant to the agency's charge or when agency participation is requested by a committee. Representatives of the technical advisory committees should be assigned as regular participants in interagency or other established technical decision-making groups on export control lists and procedures. Such participation should include substantial involvement in interagency meetings, from list construction and review all the way through to the end of the CoCom meetings. Technical advisory committees should be supported with resources (provided equally by the Commerce, State, and Defense Departments) that are sufficient to provide technical staffing by the Institute for Defense Analyses and to pay the travel expenses of industry members. The activities of the technical advisory committees and working groups should be coordinated through the Institute for Defense Analyses to ensure the committees an adequate level of technical support.

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Finding Common Ground: U.S. Export Controls in a Changed Global Environment APPENDIXES

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